Skip to content
Related Articles
Open in App
Not now

Related Articles

Statutory Corporation – Features, Merits, and Demerits

Improve Article
Save Article
Like Article
  • Last Updated : 16 Jun, 2022
Improve Article
Save Article
Like Article

Statutory corporations are autonomous corporate bodies established by a special act of Parliament or a state legislature, with predefined functions, duties, powers, and immunity as defined by the act. Statutory corporations have financial autonomy and are accountable to the legislature under which they were established.

The concerned Act specifies its management pattern, powers and functions, area of activity, rules and regulations for its employees, and relationship with government departments, amongst other things. It enjoys the legal identity of a corporate person and has the capacity of acting under its name.


1. Corporate Body: Corporate bodies are statutory corporations. They are legal entities that are created by the law and are artificial persons. A government-appointed board of directors oversees the operations of these corporations. These corporations have the authority to enter into contracts and conduct business under their names.

2. State-owned Corporations: Statutory corporations are wholly owned by the state, which provides full support by fully subscribing to the capital.

3. Employee Autonomy: Despite being owned by the government, employees of statutory corporations are not considered government employees. Employees are hired and paid by the company’s policies.

4. Financial Autonomy: Statutory corporations can make financial decisions on their own. They are not subject to any kind of accounting, budgeting or auditing. However, statutory corporations can borrow money from the government in times of need.

5. Accountable to the Legislature: Statutory corporations have internal management and operation freedom, but they are accountable to the state or government legislature that established them.


1. Initiative and Flexibility: The operations and management of a statutory organisations are carried out independently, without the intervention of the government, and with its initiative and flexibility.

2. Administrative Autonomy: Administrative autonomy refers to the ability of a public corporation to manage its affairs independently and with flexibility.

3. Quick Decisions: Because there is less file work and formality to complete before making decisions, a public corporation is relatively free from red tapism..

4. Staff that works Efficiently: Public corporations can set their own rules and regulations for remuneration and employee recruitment. It can provide better facilities and more appealing terms of service to its employees to ensure that they work efficiently.

5. Professional Management: The statutory corporation’s board of directors is made up of business experts and government-nominated representatives from various groups, such as labours and consumers.

6. Easy to raise Capital: Because these corporations are wholly owned by the government, they can easily raise needed funds by issuing low-interest bonds. The public is also comfortable subscribing to these bonds because they are safe.


1. Autonomy only on Paper: The autonomy and flexibility of public corporations are merely symbolic. Ministers, government officials, and political parties frequently interfere with the smooth operation of these operations.

2. Lack of Initiative: Public corporations are not subject to competition and are not motivated by profit. As a result, employees do not take initiative to increase profits and decrease losses. The government compensates public corporation for its losses.

3. Rigid Structure: The act defines the objects and powers of public corporations, and these can only be changed by amending the statute or the act. Repealing the act is a time-consuming and difficult process.

4. Conflict of Interests: The board of directors is appointed by the government, and their job is to manage and operate corporations. Because there are so many members, their interests may collide. The corporation’s smooth operation may be hampered as a result of this.

5. Unfair Practices: A public corporation’s governing board may engage in unfair practices. To hide inefficiency, it may charge an exorbitant price.

6. Suitability: The public corporation is appropriate only where the undertakings require monopoly powers or special powers as defined by law.

My Personal Notes arrow_drop_up
Like Article
Save Article
Related Articles

Start Your Coding Journey Now!